Asian stocks rise on yen, US optimism

‘FAIR VALUATIONS’:The MSCI Asia Pacific Index continued to recover from last month’s slump, as US factory activity topped estimates while the yen retreated 0.9%

Bloomberg and staff writer, with CNA

Asian stocks rose, with the regional benchmark index posting a two-week advance, as the yen capped its steepest weekly decline this year after the Bank of Japan boosted lending programs and US manufacturing expanded.

Toyota Motor Corp, which gets 31 percent of its sales in North America, gained 2.9 percent in Tokyo. BHP Billiton Ltd, the world’s largest mining company, climbed 3.9 percent in Sydney after posting first-half profit that beat estimates. China Petroleum & Chemical Corp (中國石化), Asia’s biggest refiner, surged 8.4 percent in Hong Kong after the company said it was seeking investment for a stake in its retail unit.

The MSCI Asia Pacific Index advanced 1.5 percent to 137.4 this week. Through Friday, the equity benchmark has climbed 1.9 percent this month, rebounding from a slump last month, as US Federal Reserve Chair Janet Yellen’s first testimony to congress boosted optimism in the world’s biggest economy. Reports this week showed US factory activity this month surpassed economists’ estimates, while the number of Americans applying for jobless benefits dropped. The yen fell as much as 0.9 percent against the US dollar.

“Investors have used the January selloff as an opportunity to hunt for bargains,” Desmond Chua, an analyst at CMC Markets in Singapore, said by phone. “Valuations in Asia look fair. In order for the markets to continue this current upward trajectory, economic data has to outperform a lot more.”

The MSCI Asia Pacific Index traded on Friday at 12.9 times estimated earnings of its constituent companies, compared with 15.6 for the Standard & Poor’s 500 Index and 14.5 for the STOXX Europe 600 Index, according to data compiled by Bloomberg.

Taiwan’s TAIEX gained 1 percent this week after adding 77.24 points on Friday to close at 8,601.86. Friday’s advance was led by bellwether electronics stocks, in particular smartphone camera lens supplier Largan Precision Co (大立光), while old economy and financial stocks also attracted bargain-hunters, dealers said.

Japan’s TOPIX advanced 3.3 percent this week, the biggest gain in three months. The Bank of Japan (BOJ) pledged to maintain plans to expand the monetary base by ￥60 trillion to ￥70 trillion (US$585 billion to US$682 billion) per year and boosted lending programs as policymakers seek to revive the world’s third-biggest economy.

“Japan is in a unique situation as the BOJ continues to add stimulus, while the Fed is beginning to taper,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital. “Liquidity tightening in China shouldn’t be a concern as policy makers need to mop up excess liquidity. There’s enough credit available in China to support growth.”

China’s central bank sold repurchase contracts this week for the first time since June, draining funds from the banking system. The move came after aggregate financing, the broadest measure of credit, climbed to a record 2.58 trillion yuan (US$424 billion) last month, data showed Feb. 15.